Term
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Okun’s Rule of Thumb |
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Definition
A 1 percentage-point change in the unemployment rate will be associated with a 2 percent change in output in the opposite direction. |
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Term
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Definition
Macroeconomists who generally favor activist government policy (more government control)
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Behavioral Economics |
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Definition
| Combines psychology and economics to explain why and how investors act and to analyze how that behavior affects the market. |
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Term
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Definition
An economic system based on the market in
which the ownership of the means of production resides with a small group of individuals called capitalists. |
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Term
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Clayton Antitrust Act |
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Definition
A U.S. law that made four specific monopolistic practices illegal: price discrimination, tie-in
contracts, interlocking directorships, and buying stock in a competitor’s company in order to reduce competition. |
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Term
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Definition
A business that is treated as a person, legally
owned by its stockholders. Its stockholders are not liable for the actions of the corporate “person.” |
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Term
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Consumer Price Index (CPI) |
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Definition
| A measure of prices of a fixed basket of consumer goods, weighted according to each component’s share of an average consumer’s expenditures. |
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Term
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Definition
| The difference between what consumers would have been willing to pay and what they actually pay. |
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Term
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Economic Decision Rule |
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Definition
If the marginal benefits of doing something exceed the marginal costs, do it. If the marginal costs of doing something exceed the marginal benefits, don’t
do it. |
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Term
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Definition
| A continual fall in the price level. |
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Term
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Definition
| A schedule of quantities of a good that will be bought per unit of time at various prices, other things constant. |
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Term
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Definition
The graphic representation of the relationship
between price and quantity demanded. |
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Term
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Definition
A measure of the decline in value of an asset that occurs over time through use. Also: A decrease in the
value of a currency. |
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Term
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Definition
| A program in which the amount of a good people are allowed to use is directly limited by the government. |
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Term
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Definition
| An action (or inaction) taken by government to influence economic actions. |
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Term
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Definition
The study of how human beings coordinate their wants and desires, given the decision-making mechanisms,
social customs, and political realities of the society. |
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Term
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Employment - Population Ratio (Unemployment Line) |
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Definition
| The number of people who are working as a percentage of people available to work. |
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Term
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Definition
| An individual who sees an opportunity to sell an item at a price higher than the average cost of producing it. |
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Term
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Federal Open Market Committee (FOMC) Ben Bernanke |
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Definition
| The Fed’s chief body that decides monetary policy. Current head chairman Ben Bernanke |
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Term
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Federal Reserve Bank |
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Definition
| The U.S. central bankwhose liabilities (Federal Reserve notes) serve as cash in the United States. |
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Term
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Federal Trade Commission Act |
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Definition
| A U.S. law that made it illegal for firms to use “unfair methods of competition” and to engage in “unfair or deceptive acts or practices.” |
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Term
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Definition
The deliberate change in either government spending or taxes to stimulate or slow down the economy.
Also, the changing of taxes and spending to affect the level of output in the economy. |
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Term
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Foreign Aid (Those that benefit :( ) |
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Definition
| Funds that developed countries lend or give to developing countries. |
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Term
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Frictional Unemployment |
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Definition
| Unemployment caused by people entering the job market and people quitting a job just long enough to look for and find another one. |
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Term
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Definition
An index of the price level of aggregate output, or the average price of the components of GDP, relative
to a base year. |
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Term
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Gross Domestic Product (GDP) |
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Definition
| The total market value of all final goods and services produced in an economy in a one-year period. |
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Term
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Gross National Product (GNP) |
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Definition
| The aggregate final output of citizens and businesses of an economy in a one-year period. |
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Term
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Definition
| Inflation that hits triple digits—100 percent or more per year. |
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Term
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Definition
| Only a free market could coordinate an efficient allocation of resources into productive industries. |
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Term
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Definition
| A formal policy that government takes toward business. |
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Term
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Definition
| A market economy, through the price mechanism, will tend to allocate resources efficiently. |
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Term
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Definition
| A continual rise in the price level |
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Term
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Definition
What is put into a production process to achieve
an output. |
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Term
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Limited Liability Company (LLC) |
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Definition
| The liability of a stockholder (owner) in a corporation; it is limited to the amount the stockholder has invested in the company. |
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Term
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Definition
| Those people in an economy who are willing and able to work. |
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Term
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Definition
| The study of the economy as a whole, which includes inflation, unemployment, business cycles,and growth. |
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Term
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Definition
| A model that focuses on equitable distribution of power, rights, and income among social classes. |
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Term
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Definition
A policy of influencing the economy through changes in the banking system’s reserves that influence
the money supply and credit availability in the
economy. |
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Term
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Net Domestic Product (NDP) |
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Definition
| The sum of consumption expenditures, government expenditures, net exports, and investment less depreciation. That is, GDP less depreciation. |
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Term
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Definition
Spending on goods and services produced in the United States that foreigners buy (exports) minus
goods and services produced abroad that U.S.citizens buy (imports). |
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Term
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Definition
| A government-imposed limit on how high a price can be charged. In other words, a government-set price below the market equilibrium price. |
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Term
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Definition
| A government-imposed limit on how low a price can be charged. In other words, a government-set price above equilibrium price. |
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Term
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Price Producer Index (PPI) |
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Definition
| An index of prices that measures average change in the selling prices received by domestic producers of goods and services over time. |
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Term
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Definition
A decline in real output that persists for more
than two consecutive quarters of a year. |
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Term
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Definition
Currency and deposits a bank keeps on hand or at the Fed or central bank, enough to manage the normal
cash inflows and outflows. |
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Term
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Definition
The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual
rate of interest. |
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Term
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Definition
An economic system based on individuals’ goodwill toward others, not on their own self-interest, and
in which, in principle, society decides what, how, and for whom to produce. |
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Term
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Sole Proprietorship |
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Definition
| A business that has only one owner. |
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Term
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Definition
The combination of high and accelerating inflation
and high unemployment. |
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Term
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Definition
| Cost that has already been incurred and cannot be recovered. |
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Term
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Definition
A graphical representation of the relationship
between price and quantity supplied. |
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Term
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Definition
| Costs that change as output changes. |
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Term
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Definition
The percentage of people in the economy who are willing and able to work but who are not
working. |
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Term
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Value of Marginal Product |
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Definition
| An additional worker’s marginal physical product multiplied by the price at which the firm could sell that additional product. |
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Term
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World trade Organization |
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Definition
| Organization committed to getting countries to agree not to impose new tariffs or other trade restrictions except under certain limited conditions. |
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Term
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Definition
| A curve that shows the relationship between interest rates and bonds’ time to maturity. |
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